Forex AUD / USD Technical Analysis – Must Hold Fibonacci Level at 0.7825 to Maintain Upward Momentum
The Australian dollar ended higher on Friday with soaring commodity prices and lower yields on US Treasuries fueling the buying frenzy. With the Australian testing its highest level since February 26, bullish traders are hopeful that the strong bullish momentum will continue in Monday’s trade.
AUD / USD stood at 0.7844 on Friday, up 0.0058 or + 0.75%.
At the start of the session, the Australian was supported by a strong rally in prices for Australia’s main export producer, iron ore. Futures on the key ingredient in steelmaking hit an all-time high on Friday, pushing spot prices higher, even above $ 200 a tonne.
AUD / USD was pushed higher later in the session after yields fell sharply following a weaker-than-expected US non-farm payroll report.
After the initial drop, yields rebounded as the market digested the data and came to the conclusion that the Missed Jobs report was not as bad as initially thought. If this line of thinking continues, yields could rebound on Monday and the Aussie could feel some pressure.
Technical analysis of the daily swing chart
The main trend is up according to the daily swing chart. The bullish trend turned higher on Friday when buyers pulled 0.7818 and was reaffirmed when buyers broke the main March 18 high at 0.7849. The main trend will go downward when moving to 0.7675.
The primary range is 0.8007 to 0.7532. AUD / USD has moved to the strong side of its retracement area at 0.7825 to 0.7769, making it a new support.
Short term outlook
Holding above the main Fibonacci level at 0.7826 will indicate the presence of buyers. Taking last week’s high at 0.7862 will signal buying strength.
The daily chart indicates that there is plenty of room upward above 0.7862 with the February 25th major high at 0.8007 as the main upside target.
A break below 0.7825 will be the first sign of weakness. If this move creates enough downside momentum, look for the sell to eventually expand to the 50% main level at 0.7769.